Financial sustainability for sustainable development

It is not unusual to come across the mention of ‘poverty’ and ‘Africa’ in the same sentence. Our Africa’s website states that over 40% of people living in sub-Saharan Africa live in absolute poverty, despite the sharp decrease of worldwide absolute poverty falling from 40% to 20%.

This association of Africa as the poverty-stricken continent is one which is being fiercely contested. Africa will become a prosperous continent, according to the African Union’s Agenda 2063, even if it takes decades. This transition requires, among other factors, a focus on sustainable development.

This focus on sustainable development is being championed locally through the National Development Plan (NDP) and abroad, notably through the United Nations’ Sustainable Development Goals (SDGs). Sustainable development ensures that as we meet our present needs, future generations will, too, have the ability to meet their own needs. At the heart of sustainable development is the need to provide people with quality of life, a life not plagued by poverty.

As one of South Africa’s leading development agencies, Kagiso Trust (KT, the Trust) appreciates the fact that our country’s sustainable development efforts will ultimately be impacted by the continent’s own. South Africa’s development resolves cannot escape the context of its geographic location. It is, therefore, through this understanding that Kagiso Trust’s development work is aligned with both the NDP and SDGs, and through its entity Kagiso Africa Investments (KAI), endeavours to share best practice and garner lessons from other African countries.

The Trust has resolved to overcome poverty in South Africa through the implementation of its tried and tested, replicable and sustainable development models. KT’s programmes are focused on its four strategic objectives: Education Development, Socio-economic Development, Institutional Capacity Building and Financial Sustainability. The latter focus area is one which we identified as obligatory to share with fellow not-for-profit organisations (NPOs). The logic is straightforward: without financial sustainability, there is no sustainability and growth for NPOs to execute their development work in communities. While Kagiso Trust actively supports local NPOs through the Institutional Capacity Building’s civil society programme, the Trust set up KAI to play a similar role outside the country. KAI’s footprint is currently 4000km away with the Kenya Community Development Foundation (KCDF) a Nairobi-based development organisation that supports poor, marginalised and disadvantaged communities to initiate and drive their development agenda. Having found a like-minded development organisation, in 2012 KAI set up KCDF Investment Holdings (Pty) Ltd. The investment holding company was founded to generate dividends to ensure that with its 60% shareholding, KCDF becomes a self-funded development agency, independent of grant funding.

A lesson learnt by Kagiso Trust during the dawn of South Africa’s democracy when international donors redirected funding to the new government, an investment holding company (then Kagiso Trust Investments) provided the Trust with a steady flow of dividends year on year, enabling the Trust to continue operating in the development space for more than 20 years independently. We believe that this model can be successful with KCDF Investment Holdings in terms of generating income for development work and programmes rather than self-enrichment.

The sustainable development agenda has forced Africans to be innovative as we formulate ways to ensure a better life for all. KT has repurposed the traditional profit-driven investment company model to one that is financial sustainability-driven for sustainable development. As we look forward to expanding our reach to other African countries, we continue to drive our strategic objectives in South Africa and support the NDP. It is the culmination of our joint efforts, both in South Africa and the continent that will, ultimately, lead to us overcoming poverty and becoming the prosperous Africa envisaged by our continent’s leaders.